FM comments and further action and to drive market


The make or break week talked about last week has successfully managed to close in positive territory and ensure that the momentum continues. The markets ended on a bullish note closing above the 20K mark on the SENSEX and above the 6050 level on the NIFTY. The markets have also closed at new 52 week highs. The markets seemed a lost case when they fell sharply on Wednesday and it appeared that in all probability there would be no rate cut. However when the government took measures to control the subsidy on account of diesel prices on Thursday by allowing the OMC’s to charge market prices to bulk consumers, and increasing diesel prices monthly by 50 paisa a litre per month, the markets were back in action.

The bulk consumers would pay roughly Rs 10 per litre higher. OMC’s rose very sharply on Friday and registered double digit gains. Since the beginning of the month IOC has moved up from Rs 270 to 349, BPCL has moved from Rs 356 to Rs 434 while HPCL has moved from Rs 290 to Rs 363. ONGC moved from Rs 267 to Rs 338, OIL India moved from Rs 466 to Rs 561 and GAIL from Rs 356 to Rs 383. The BSEOIL index has moved from 8,518 to 9,571, a gain of 1,053 points or 12.36%. The bulk of these gains have come in the last three to four days.

The FM is on a road show for FII’s next week in Singapore, Hong Kong, London and Frankfurt. The objective of this road show is to assure investors the seriousness of the government in reducing subsidies and also ensuring that there is no sovereign downgrade of the nation’s rating. FII’s have been key investors in the country and invested roughly Rs 1.3 lakh crs in the calendar year 2012. So far in the current year they have invested Rs 13,500 crs in the 14 days of trading that have taken place so far.

Readers would recall the impact of 5 trading Tuesdays in a month and the possibility of that leading to a surge in the markets. In the 14 trading days in this month the markets have gained over 612 points or 3.05%. Of the above almost half or 285 points have come on the three Tuesdays. We seem to be on track for January being another cracker of a month.

The key driver would be what the FM says to assure foreign investors on his road show in 4 countries over the next week. I believe this week would set the tone for a great finish in the following week which would see RBI announce its policy review on Tuesday the 29th and January futures expiring on Thursday the 31st of January. Keep your fingers crossed for big action in the markets in the next nine trading days.

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